Hunton Insurance Recovery Blog

Directors and officers liability insurance is first and foremost protection against personal exposure of boards and management who are targeted in claims challenging their decisions in running the company. That’s why it is surprising how often dedicated “Side A” coverage—insurance coverage, subject to no self-insured retention, available exclusively for the benefit of directors and officers who are not indemnified by the company—is overlooked in placing and renewing D&O insurance programs. One recent Texas bankruptcy ruling, In re First Brands Group, LLC, No. 25-90399 (CML) (Bankr. S.D. Tex. Jan. 7, 2026), demonstrates just how powerful Side A protection can be. There, against strong objections from the creditors’ committee, the bankruptcy court granted motions by numerous former executives seeking relief from the automatic stay to recover D&O insurance proceeds, unlocking millions in Side A coverage to defend against private and governmental claims asserted in connection with the bankruptcy.

Because insurance law is a creature of state law, it is rare for the United States Supreme Court to wade into insurance matters. But as our colleagues explained last fall, the Supreme Court agreed to do just that when it granted certiorari in Truck Insurance v. Kaiser Gypsum, a Fourth Circuit bankruptcy case. On June 6, 2024, the Supreme Court issued an opinion unanimously reversing the Fourth Circuit. In doing so, the Court held that insurers with financial responsibility for bankruptcy claims are “parties in interest” under the United States Bankruptcy Code and, therefore, may appear and be heard, including to object to Chapter 11 reorganization plans. This decision clarifies an important issue and paves the way for potentially greater participation by insurers in the Chapter 11 process.

The United States Supreme Court recently accepted review of In re Kaiser Gypsum Co., Inc., 60 F.4th 73 (4th Cir. 2023), a Fourth Circuit decision concerning “whether an insurer with financial responsibility for a bankruptcy claim is a ‘party in interest’ that may object to a Chapter 11 plan of reorganization.” This issue, while one of first impression for the SCOTUS, has been litigated several times in the appellate courts, leading to a circuit split over the interplay between Article III and 11 U.S.C. Section 1109(b).